Assessment of Factors Affecting the Availability of U.S. Oil Supplies From the Caribbean

Due to increased U.S. reliance on Caribbean oil and unrest in neighboring Central American countries, GAO identified and discussed the various factors which may influence the supply of crude oil and refined products from various Caribbean countries.

GAO found that the ability and willingness of individual Caribbean oil producers and refiners to continue or to increase production and exports to the United States depend on complex and interrelated political, economic, financial, technical, and foreign policy considerations. Mexico and Venezuela have substantial oil reserves; however, both countries have nationalized their oil industries and restrict foreign investment in the petroleum sector, and both comply with production quotas set by the Organization of Petroleum Exporting Countries and have curtailed or delayed maintenance and development of oil facilities due to financial difficulties and in response to the current weak oil market. Furthermore, Trinidad and Tobago is rapidly depleting its known crude oil reserves. Future exports of refined petroleum products from Venezuela may be limited because the national oil company has postponed the upgrade of two refineries, and Mexico does not plan to be a refined product exporter. Other Caribbean refineries are closing down due to the worldwide excess of petroleum refining capacity and operating restrictions. Although the security of Caribbean oil facilities and transportation systems is vital to the United States, officials perceive little immediate threat from the current unrest in Central America. Finally, international assistance programs designed to develop alternative energy resources assist oil-consuming rather than oil-producing countries.